Short Sales & How They Work

Homeowner Loses the Most in Foreclosure

1. Foreclosure reported to credit agencies.
2.                        Late payments reported to credit agencies.
3.          Remains for at least 7 years.
4.    View negative by credit lender, employers and insurance compare.
5. Adverse credit rating may limit ability to get credit cards, mortgage loans, consumer loans, etc.
6.   Foreclosure may not relieve you of responsibility.
7.  Insurer could bring suite against you        
8. Reportable income or loss to the IRS via 1099-A

 

Short Sale is Still a Better Option than Foreclosure

 

·                    It is not as bad on your credit as a foreclosure is. Once the home is sold as a short sale it is marked on your credit as                 “paid in full”. No one knows the difference. The only dings in your credit will be from the late or missed payments.

·                    Although you may have to pay the deficiency judgment & 1099-A, you will not be viewed negatively for 7 years by credit             lenders, employers & insurance companies.

·                    Short sales will not limit your ability to get credit cards, mortgage loans, consumer loans and other forms of                    credit. However, you will have dings on your credit from late or missed payments and that can limit your ability.

                Mortgage Servicer Departments

1.   Customer Service
2.   Collections (Do not go to the collection department b/c they will never transfer)
3.    Foreclosure
4.    Bankruptcy
5.    Loss Mitigation (this is where you need to go for help!)

 

                 Collectors Are Measured By:

• Call Talk Time: Industry Average 2 minutes (have them hold for a while). The Vice President of Collections gets a bonus:

1.      If Call time is less than 2 minutes

2.      What % of loans were brought current

3.      Where does the bulk of collections fall- 30 days or less to drive revenue

• Quick Collects
• Promise to Pay
• The collection department is penalized when they transfer you to the loss mitigation department.

 

                  Foreclosure Timeline:

·        Set by the state the property is in.

·        Influence by size of mortgage servicer.

·        Monitored by Mortgage Insurers and Mortgage Investors.

·        Can be impacted by the actions of the homeowner.

 

                    Loss Mitigation Department: This is where you want to go!!

·        Get a mortgage statement when you were current on payments & call that 1-800 number.

·        When calling your mortgage company do not give anyone your name, loan # or social security # until you reach the loss mitigation department.

·        Tell the loss mitigation department your situation. They get paid bonuses on how many problems they solve. They will most likely give you the option of a short sale.

·        When you and the loss mitigation department have decided on what you are going to do ask for their address & a contact person so that you can send your Documentation Package.

·        ALWAYS mail everything certified with a signature required. This way the mortgage servicer can never say they have not received it. You will have proof as to who signed for the document.

·        Write down what documentation they are asking for and if it isn’t on the list we have provided then add it to it. DO NOT remove anything from the list we have provided even if they did not ask it from you. They eventually will need it and it will slow down the process.

                                                      ·        Ask your workout rep in the loss mitigation department who your insurer and investor’s are. (this way we can contact them directly with any offers we receive once listed)

 

 

 

    Short Sale Process: Why does it take so long?

1.      Homeowner contacts Mortgage Servicer
2.     Mortgage Servicer waits for Homeowner to send documentation. If missing documents then they wait get around to it when they can. This is why it is important to have everything sent the first time.
3. Mortgage Servicer orders a credit report, an appraisal, contacts the Realtor and then waits on an offer.
4. Once the Realtor receives offer(s) the listing agent has seller sign all offers and then sends it to the Mortgage Servicer. 
5. Mortgage Servicer then sends the highest & best offer to the Mortgage Insurer.
6. Mortgage Insurer normally takes 2 weeks (no reason for time frame), finally they approve it and send an approval letter & the offer back to the Mortgage Servicer.
7. Mortgage Servicer sends the Mortgage Insurer’s approval letter & offer to the Mortgage Investor.
8. Mortgage Investor normally takes 2 weeks (no reason for time frame), finally approves it and sends an approval letter & the offer back to the Mortgage Servicer.
9. Mortgage Servicer then writes an approval letter & lets the seller know that you have a contract. Once all of this is complete it is now 8-9 weeks later.
10. If the Listing Agent can send the offer to the insurer and the investor first thing then this process will move a lot quicker. (reason why you ask the mortgage servicer for your mortgage investor & mortgage insurer)

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